October 28, 2016

Osborne warns voters of Brexit’s permanent hit to economy

British Chancellor of the Exchequer George Osborne arrives for the start of the International Monetary and Financial Committee (IMFC) Meeting during the 2016 World Bank-IMF Spring Meeting in Washington

British finance minister George Osborne said a vote to leave the European Union would do permanent damage to the country’s economy and could cost each household 4,300 pounds a year by 2030.

Seeking to focus voters on what he called the biggest question of their generation, Osborne said all the alternatives to remaining in the union would leave Britain’s economy smaller than if it stayed in the world’s biggest trading bloc.

“Put simply: over many years, are you better off or worse off if we leave the EU? The answer is: Britain world be worse off, permanently so,” Osborne said.

Three days after the official launch of campaigning for Britain’s June 23 EU membership referendum, the government is due to present on Monday a report into the long-term economic impact of a so-called Brexit.

Osborne, writing in The Times newspaper, said a decision to leave would be “an extraordinary self-inflicted wound” which would damage trade and investment.

Most opinion polls show the rival campaigns running neck and neck although one published on Monday showed the “In” campaign had retained a seven percentage-point lead.

Another poll published last week showed voters were very sensitive to the cost to their own finances of a Brexit.

Pollster YouGov said 45 percent of respondents backed ‘In’ compared with 36 percent for ‘Out’ if the cost of a Brexit for them was 100 pounds a year.

The latest appeal by Osborne, a close ally of Prime Minister David Cameron, for Britons to vote to stay in the 28-member bloc spurred accusations from ‘Out’ campaigners that the government was resorting to unreliable estimates.

“We wouldn’t attempt to put precise numbers on the economy for 2030 because who knows what’s going to happen,” John Redwood, a Conservative lawmaker and a former minister, told BBC radio. “I think their 2030 forecast is completely worthless.”

Brexit supporters say Britain’s economy would flourish outside the EU as it would be free to negotiate its own trade deals and could chop the bloc’s rules and regulations.


One of the leading ‘Out’ campaigners, London Mayor Boris Johnson, has said Britain could strike a trade deal with the EU similar to the one reached between the bloc and Canada, meaning Britain would no longer have to contribute to the EU budget and keep its borders open to workers from around the bloc.

Osborne said that kind of agreement would not cover Britain’s powerful services industry and would leave the economy 6 per cent smaller by 2030 than if it stayed in the European Union.

That estimate is higher than many other forecasts of the impact of a Brexit.

It is also central to Osborne’s calculation of economic damage, which divides the value of a projected growth shortfall among Britain’s roughly 27 million households.

Osborne and Johnson are rivals to become Britain’s next prime minister.

Opponents of EU membership have said the government is selling Britain short by saying it cannot stand alone.

But the Treasury’s words chime with those of other economic institutions, such as the International Monetary Fund.

Last week, Osborne said Britain’s homeowners could face higher borrowing costs if there was a British exit.

Bank of England Governor Mark Carney, who has previously said Britain’s economy has benefitted from its membership of the European Union, is due to speak in parliament on Tuesday.

In his newspaper column, Osborne also said a British exit from the bloc could weaken the West at a time when it is facing threats to its security and values from Russian President Vladimir Putin’s ‘aggression’ to Islamist militancy .

US President Barack Obama is expected to say during a visit to Britain this week that he believes the country is better off economically and politically if it stays in the European Union.

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